When the 10-year US Treasury yield spiked, the dollar broke above 101, and pre-holiday risk-averse capital withdrew, the non-ferrous metals sector came under pressure. Gold fell back to $4,100, while copper and aluminum weakened across the board.
On the surface, macro disturbances appear to be weighing on non-ferrous metals. Yet positive signals are emerging at the same time: China's central bank increased its gold holdings for a 23rd consecutive month, buying another 23 tonnes in September; spot copper concentrate TC dropped to -$238 per dry tonne, and 2026 long-term contract TC stands at zero, forcing smelters to pay out of pocket to secure material; and the non-ferrous sector has quietly fallen back to its November level, where allocation pricing already looks attractive.
With macro disturbances on one side and tightening industrial supply-demand on the other, is this the end of a trend or a "golden pit"? Huabao Fund believes short-term disruptions do not change the medium-to-long-term logic. Tight supply-demand conditions and AI computing power demand are building a solid floor for non-ferrous metals. Once expectations for the 10-year real interest rate peak, a right-side recovery is expected to begin.
Macro Level: Short-Term Disturbances Intensify, Long-Term Logic Unchanged
In the short term, expectations for Federal Reserve rate hikes have cooled but have not disappeared. US September nonfarm payrolls weakened sharply and the prior two months were significantly revised down. With unemployment rising and core PCE cooling, the market now assigns an 82.3% probability that the Fed will not hike in October. European debt risk repricing and rising risk aversion are unsettling European and US risk appetite. China's September PMI returned to expansion, but domestic demand remains weak, policy support continues, and no decisive turning point has appeared.
Over the medium to long term, Fed rate hikes cannot directly raise physical supply, nor will they push non-US central banks to increase their holdings of US Treasuries. Instead, they amplify the interest burden on US debt. Structural contradictions will ultimately point toward easing, but easing lacks a legitimate rationale, and repeated shifts in expectations will continue to amplify volatility. Once expectations for the 10-year real interest rate peak, non-ferrous metals may see a right-side repair.
Industrial Metals: Copper and Aluminum Supply-Demand Tightness Is Highly Verifiable
1. Copper: In the short term, focus on smelter production cuts; over the medium to long term, it benefits from AI computing power demand. Imported copper concentrate TC has fallen to -$238 per dry tonne. A negative TC means copper concentrate supply is tight, and smelters must absorb costs to secure material. Smelting losses will force passive production cuts, reducing refined copper output and supporting copper prices. The 2026 long-term contract TC at zero means that for the entire next year, smelters buying long-term copper concentrate from large mines will receive no processing fee income. Tight copper concentrate supply may not be a short-term event; the raw material shortage could persist into the following year. Chile's Escondida and Centinela copper mines have been disrupted by safety shutdowns and labor strikes, together affecting about 7% of global copper supply, intensifying pressure on copper concentrate supply. Combined with continuous inventory drawdowns, this supports copper prices. Over the medium to long term, the energy transition and accelerating AI computing infrastructure buildout keep the outlook for copper prices positive.
2. Aluminum: Post-holiday inventory buildup (downstream operations halted during the National Day holiday, increasing aluminum ingot inventories) is a seasonal short-term phenomenon and does not change the broader low-inventory backdrop. In the short term, Indonesian commissioning disruptions have slowed, and Middle East restarts remain uncertain. Global and Chinese inventories continue to draw down, supporting aluminum prices. Over the medium to long term, Indonesian new capacity and Middle East restarts will remain in contention, but against a backdrop of stronger gold and copper, the aluminum price floor should not be viewed too pessimistically. Even at a conservative estimate of 22,000 yuan per tonne, the dividend yield remains considerable.
3. Tin: Supply and demand show a "strong expectations, weak reality" pattern, and more signals are needed to verify AI computing power's pull on tin demand. Supply from Myanmar and Indonesia is falling short of expectations, while AI demand is booming. Overall, industrial metals have healthy supply-demand fundamentals and low inventories. Mid-October will be a key verification window, using post-holiday inventory and downstream demand data to test whether the current sector logic holds.
Precious Metals: Rate Pressure Versus Central Bank Gold Buying, Gold Bottom Confirmed, Long-Term Gold Price Trend Favored
In the short term, the dollar broke above 101, and the 10-year US Treasury yield rose continuously, pushing up real interest rates and holding costs. London gold fell back to around $4,100. However, allocation flows provided counter-support: China's central bank increased its gold holdings by about 23 tonnes in September, buying for a 23rd consecutive month. Over the medium to long term, the upside for gold prices depends on the transmission from the US technology sector to the fiscal balance. Expanding US debt erodes dollar credibility over time, which supports the long-term gold trend. The narrative of gold as an alternative to dollar credit is being validated by more and more data and facts, and the long-term gold price trend remains positive.
Minor Metals: Pullbacks Mostly Reflect Crowdedness Unwinding, Industrial Logic Intact
Minor metals broadly pulled back last week, with lithium and tungsten-molybdenum sectors falling notably. After lithium prices fell below 120,000 yuan, longs and shorts repriced, and whether destocking has ended remains in doubt; bulls need Q4 terminal order confirmation. Tungsten concentrate fell, exports dropped 37% year-on-year, and long-term contract quotes were lowered. The "strategic metal" narrative cannot temporarily offset the price pressure from currently weak demand. Overall, most minor metals pullbacks reflect crowdedness and beta unwinding rather than a breakdown in industrial logic.
Summary and Strategy
Huabao Fund said the expectation of moderate Fed rate hikes remains unchanged, and it favors the medium-to-long-term allocation value of non-ferrous metals. In the short term, the September rate hike, the October pause expectation, macro disturbances, and real interest rate pressure have already been fully priced in. Pre-holiday risk reduction contributed to the recent broad pullback. Over the medium to long term, copper and aluminum supply-demand tightness is the most verifiable, precious metals have a strong long-term logic, and minor metals pullbacks mostly reflect crowdedness and beta unwinding rather than a breakdown in industrial logic. The non-ferrous metals sector has now fallen back to its November level, offering relatively high allocation value. Combined with tight supply-demand and AI-driven demand, once expectations for the 10-year real interest rate peak, a right-side repair is expected.
The strategy recommendation is to build positions in batches on dips and capture the sector's medium-to-long-term allocation value. In the computing power era, non-ferrous metals build the foundation! Focus on metals demand behind technology development! Non-Ferrous ETF Huabao (159876) and its feeder funds (Class A: 017140, Class C: 017141) comprehensively cover leaders in copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, tin, and other industries. Its heavyweight stocks include Zijin Mining, Luoyang Molybdenum, Northern Rare Earth, and Aluminum Corporation of China. The 2026 interim report performance shows all 60 constituent stocks were profitable, and nearly half of them grew net profit attributable to parent by more than 100% year-on-year, providing solid support from strong fundamentals.
In addition, the number of constituent stocks is significantly larger than comparable non-ferrous indices (30-50 stocks), allowing better coverage of semiconductors and new materials. For investors bullish on both technology and non-ferrous metals, this ETF is an efficient tool to gain one-stop exposure to the non-ferrous metals industry and capture sector beta. Source: Shanghai and Shenzhen exchanges, etc., as of December 10, 2026. ETF fee disclosure: When investors subscribe or redeem fund shares, the subscription and redemption agent may charge a commission of no more than 0.5%. On-exchange trading fees are subject to the actual charges of the securities company. ETFs do not charge sales service fees.
Feeder fund fee disclosure: For Huabao CSI Non-Ferrous Metals ETF Initiating Feeder Fund (Class A), the subscription fee is 1,000 yuan per transaction for subscription amounts of 2 million yuan (inclusive) or more, 0.6% for 1 million yuan (inclusive) to 2 million yuan, and 1% for less than 1 million yuan. The redemption fee is 1.5% for holding periods of less than 7 days and 0% for holding periods of 7 days (inclusive) or more, with no sales service fee. For Huabao CSI Non-Ferrous Metals ETF Initiating Feeder Fund (Class C), there is no subscription fee. The redemption fee is 1.5% for holding periods of less than 7 days and 0% for holding periods of 7 days (inclusive) or more; the sales service fee is 0.3%.
Risk disclosure: Non-Ferrous ETF Huabao passively tracks the CSI Non-Ferrous Metals Index. The index base date is December 31, 2013, and it was launched on July 13, 2015. The index constituent composition is adjusted in due course according to the index compilation rules, and its back-tested historical performance does not predict the index's future performance. The risk level of this fund as assessed by the fund manager is R3-medium risk, suitable for balanced (C3) and above investors. The suitability matching opinion should be based on the sales institution. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only, and investors must be responsible for any investment decisions they make independently. In addition, any views, analyses, and forecasts in this article do not constitute any form of investment advice to readers, nor do they assume any responsibility for direct or indirect losses caused by the use of the content of this article. Fund investment involves risks. Past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Fund investment requires caution. MACD golden cross signals have formed, and these stocks are rising well!